Bff Bank Spa · MIL:BFF
Bff Bank Spa — BFF Banking Group — IPO Roadshow (February 2018)
23 slides from Bff Bank Spa's IPO roadshow presentation, February 2018
Slide 1: BFF Group overview
BFF Group overview February 2018
Slide 2: Disclaimer
Disclaimer This presentation may contain written and oral "forward-looking statements", which includes all statements that do not relate solely to historical or current facts and which are therefore inherently uncertain. All forward-looking statements rely on a number or assumptions, expectations, p
Slide 3: BFF Banking Group: A Bank Like No Other
BFF Banking Group: A Bank Like No Other Leading financial services provider to suppliers of the European Healthcare and Public Administration sectors Market leader in large and underpenetrated markets €255bn market Solid and resilient business model with compelling assets and >15% CAGR 2013-2017(1)
Slide 4: Leading Provider of Credit Management and Working Capital Solutions to Public Sector Suppliers
Leading Provider of Credit Management and Working Capital Solutions to Public Sector Suppliers, to Tackle the Payment Delays From the Public Administration in Southern Europe and CEE Endemic Delay in Payments in the Public Sector €255bn of Public Sector expenditures in the countries we operate in ▪
Slide 5: BFF Banking Group’s Services Offered
BFF Banking Group’s Services Offered General Overview Focus on Non-recourse Factoring – Revenues Model Pay Purchase Price Collect Cash • Three business lines: Suppliers Debtors Sell Receivables Submit Receivables − Non Recourse Factoring (“Purchased”) (Funded business, • Healthcare + - + • Healthcar
Slide 6: Solid Business Model…
Solid Business Model… Suppliers Debtors ▪ Long-standing relationship with top suppliers to the ▪ Long track record in dealing with Public entities PA (leading multinational and national suppliers) and deep knowledge of the payment dynamics top 10 clients have been BFF clients for more than bette
Slide 7: …Able to Grow Profitably through Every Season
…Able to Grow Profitably through Every Season Net Income (2007-2017) Credit Bubble Financial Crisis Sovereign Debt Crisis BFF with Banking License ITA Gov. Downgrade Downgrade Downgrade Downgrade debt downg. to BBB+ by to BBB by to BBB- by to BBB by from A+ to A S&P S&P S&P DBRS S&P (Sep-11) (Jan-20
Slide 8: We Operate in an Underpenetrated €255bn Market, with Leadership Position in Many Geographies…
We Operate in an Underpenetrated €255bn Market, with Leadership Position in Many Geographies… Key Considerations BFF Positioning Total Public Expenditure in Goods and Service (€bn) Non-recourse Factoring outstandings 2020E ▪ Total potential market is the with PA & NHS (€7.8bn) 134 140 133 132 136 pu
Slide 9: …With a Growing Business, Increasingly Diversified…
…With a Growing Business, Increasingly Diversified… Key Considerations Customer Loans Evolution (€m) ▪ Significant customer loans growth (CAGR 3,018 BFF ex Magellan (€m) 13-17 of +21%) with higher contribution from less capital intensive segments 2,499 627 (non NHS public administration) 447 2,391 1
Slide 10: …and with a Fortress Balance Sheet and Low Risk Profile…
…and with a Fortress Balance Sheet and Low Risk Profile… Key Considerations Breakdown of Balance Sheet 2017 (€m) ▪ A fortress balance sheet 4,447 4,447 − Conservative asset / liability management 206 Other 139 Other 101 AFS approach: loan book funding duration higher REPOs Liquid government bonds HT
Slide 11: … Couple With a Diversified Funding Base…
… Couple With a Diversified Funding Base… Key Considerations Available Funding(1,2) (€m) • A diversified and flexible funding base to support Liquidity 351% 391% 502% 287% business growth: Coverage Ratio(2) (3) • Deposits accounting for 38% of drawn funds, 3,458 €1,000m as of December 2017, +22% ver
Slide 12: … and Backed by a Strong Capital Position…
… and Backed by a Strong Capital Position… Total Capital Ratio - Banking Group ex TUB Capital Ratio(1) ▪ Robust capital position maintained also after the cash acquisition of Magellan, the full 2017 adjusted net income CET1 16.7% 12.6% 6.55% SREP pay-out and the DBRS Italian downgrade requirements ▪
Slide 13: Growth in net banking income
Growth in net banking income Key Considerations Adjusted Net Banking Income(1) (€m) ▪ Adjusted net banking income CAGR 2013-17 of 13%: ▪ +3% growth in 2017 vs. 2016 (net of one-off) thanks to higher average (3) (3) 180 outstanding and to lower interest expense 175 driven by a diversified funding bas
Slide 14: Potential for Further Funding Cost Optimization
Potential for Further Funding Cost Optimization Cost of funding (BFF + Magellan - €m) ▪ Reduction in cost of funding continued with an average Average funding lines cost of funding of 1.96% in 2017, more than offsetting Tier used (excl. REPO, €m) 2,033 +18% 2,397 2 issuance and Magellan acquisition
Slide 15: Already Invested in the Business to Capture Future Growth Potential
Already Invested in the Business to Capture Future Growth Potential Key Considerations Operating Costs Adjusted for Extraordinary Items(1) (€m) Cost / Income adjusted(1,2) 30% 32% 30% 32% 34% ▪ BFF heavily invested over the last four years in 61(1) infrastructure and people to support growth 56(1) 9
Slide 16: High Profitability and Significant Dividend Capacity
High Profitability and Significant Dividend Capacity Key Considerations Net Income adj(1) (€m) ▪ Almost doubled net income in the last 5 years to €84m RoTE adjusted combined(1) 26% 22% 28% 37% 33% — Significantly improved return on capital thanks to an (5) 87(4) 84 efficient use of capital with 2017
Slide 17: High Visibility of Future Revenues from LPI
High Visibility of Future Revenues from LPI Key Considerations LPI Stock Evolution (Excl. Magellan) (€m) ▪ The full impacts on BFF’s P&L originated by the LPIs and related to the significant growth of purchased receivables over the last years 547 534 will be fully visible only in the coming years: -
Slide 18: Infrastructure, Funding and Capital Ready to Support Growth and Attractive Dividend Flow
Infrastructure, Funding and Capital Ready to Support Growth and Attractive Dividend Flow RoTE: 33%(1) Total Capital ratio: 17.5% Target Total Capital ratio: 15% 1 Invested in the Significant investment in infrastructure business for and expanded employee base to support business expansion Highly cap
Slide 19: Management Fully Aligned With Public Market Shareholders
Management Fully Aligned With Public Market Shareholders Management have been shareholders of the business since 2006 Senior executives have been in the bank on average for more than 12 years ✓ Paid only if budget achieved, zero otherwise Yearly management ✓ 50% in shares or stock options for risk t
Slide 20: BFF 2020 “Strategic Targets”
BFF 2020 “Strategic Targets” Further consolidate leadership in Italy ▪ Continue to develop tailor-made offering to serve specific customer needs ▪ High quality services for large clients covering the full healthcare value chain ▪ Increase penetration into adjacent segments of non-healthcare supplier
Slide 21: Appendix
Appendix bffgroup.com 21
Slide 22: Traditional Business Subject to Seasonality, with Peak in Q4
Traditional Business Subject to Seasonality, with Peak in Q4 Loans Evolution by Quarter (BFF Ex Magellan) (€m) 1Q 2Q 3Q 4Q Magellan 3,018 2,499 2,531 2,557 2,596 627 2,270 2,319 2,212 489 507 545 392 447 2,391 390 406 2,052 2,043 2,050 2,050 1,962 1,880 1,927 1,806 1,554 1,603 1,457 1,343 1,349 1,35
Slide 23: Shareholders' structure
Shareholders' structure Shareholders (%) ▪ Centerbridge owns 55.81% of BFF ▪ Management team (31 shareholders) among them owns 7.59% of BFF capital 36.60% BFF Luxembourg S.àr.l. (Centerbridge) Cordusio Fiduciaria (Management) Flottante 55.81% 7.59% 23 23 Source: shareholders’ official communications